Every homeowner now is aware that the number of foreclosed homes is hitting a record high. The reasons behind this may still be the same but a new reason only makes matters worse for the already distressed homeowners. Lending companies offer a lower interest rate at the beginning of the term until a certain period of time and as the rate increases after the initial period, the borrowers find it difficult to cope up with the payments.
This causes the number of bank foreclosures to increase even more adding to the existing list of foreclosures. Understanding the foreclosure procedure can give homeowners the advantage of preventing their homes from getting foreclosed. Although the procedure varies from state to state, the concept is almost always the same. The first part of the process is the pre foreclosure where the lender sends a notice of default to the borrower after missing making payments usually within 90 days. If the lender and borrower cannot come to acceptable terms, the lender pushes the foreclosure process further and repossess the house.
In some states, the foreclosure process is based mainly on the original loan contract. This is called the non-judicial foreclosure. The entire process is taken solely by the lender and this process can be completed in a short period of time. In a judicial type process, the court is involved from the very beginning. The lender has to first file a notice of intent to foreclose on a property with the court and this gives the borrower some time to respond to the default letter. If the borrower fails to respond, the court sets a date to further move the case. This type of process takes about six months or longer.
Knowing the early signs of foreclosure and taking the necessary actions in its early stage can prevent homeowners from sinking deeper into the foreclosure process. Communication with the lender is an important step that should not be taken for granted.